Financial Times

Gunman attacks Customs man
Customers questioned in GoldQuest probe
The investigation into the GoldQuest referral marketing scheme took a sensational turn last week with an attack on a senior Customs sleuth involved in the probe as the Central Bank and Customs intensified their crackdown on revenue and credit card fraud among those involved in the scheme.

The Central Bank dispatched 'show cause' letters to the credit card holders who are alleged to have violated exchange control regulations by buying GoldQuest products while Customs investigators began to interrogate individual participants of the Goldquest scheme as part of their revenue fraud investigation.

The probes were first reported by The Sunday Times FT and Lanka Business Report television in a joint investigation. On Thursday night, three men attacked Superintendent of Customs, Athula Lankadeva, who is currently carrying out the investigations on the Gold Quest case.

Lankadeva told The Sunday Times FT that the men, one armed with a gun, had approached him near his house at Wattegedara, Maharagama at 9.30 p.m. "I came from work and parked my car near the house and after opening the gate, I saw three men rushing towards me," he said.

He pushed the first man who came towards him and had seen him carrying a gun. "Then I grabbed hold of the second man and started using him as a human shield to escape the gunman and came near the car," he said. Lankadeva said that the gunman was persistently trying to aim at him despite the human shield and his shouting to alert the neighbours.

He had managed to come to the vehicle and had opened the car door, to block the men, then ran towards a bus full of pilgrims and lost himself in the crowd. Lankadeva, who has made a complaint to the Maharagama Police, said that he can identify the gunman but not the other two men.

"I don't have any personal enemies and I know that this is due to an investigation that I am currently handling," he said adding that the major investigation he is conducting at the moment is one into the gold coin imports.

Director General Customs, Sarath Jayatillake, had telephoned Lankadeva and plans to issue him a licensed gun for protection. Marlin Perera, Officer-In-Charge, Maharagama police station said that he had recorded a statement from an eyewitness and sent a police patrol to Lankadeva's house.

So far Customs have questioned about 60 participants of Gold Quest's controversial binary compensation scheme to find the exact value paid by customers through the GoldQuest website.

Customs is still holding the shipment of gold medals and other products detained at the airport on suspicion that they were under-valued and that the Customs declarations submitted were false.

Individual participants are believed to have prepaid the goods, either in part or in full, but the declarations had allegedly said they were on Documents against Payment (D/P) terms. The Customs are proceeding to act against the importer after the Department of Import and Export Control, which previously allowed the goods to be cleared, withdrew the approval.

Customs have also raided the shipping firm, which imported the GoldQuest products and confiscated documents relevant to the case. The Central Bank in the meantime is demanding explanations from credit card holders who are believed to have violated exchange control regulations.

Over 4000 credit card holders have violated exchange control regulations by paying for the GoldQuest scheme on behalf of a third party when in fact the cards are for personal use.

"The penalty for this offence is Rs. 2000 plus up to three times the value of the offence," H. A. G. Hettiarachchi, Controller of Exchange said. He said that the investigation was started last January on these transactions, after an observation made to him by the credit card taskforce, which represents the credit card issuing banks in December last year. It is customary for the commercial banks to report all transactions over $5000 to the regulator.

Based on these statements the Central Bank discovered that third party foreign currency transactions were carried out on credit cards to pay for GoldQuest products.

When a credit card is issued for the first time, the cardholder is requested to endorse a declaration together with terms and conditions, where it is specified that the cardholder is bound by the prevailing exchange control regulations, Sarath Piyaratne, Deputy CEO, HSBC told The Sunday Times FT. "These regulations cover third party transactions as well," he said.

Piyaratne said that HSBC is sending a letter to all the cardholders stating the repercussions of such transactions as advised by the Central Bank. All other credit card issuing banks have followed suit.

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